| Question And Answer | |
|---|---|
| Subject: | Sucession of business to Legal heir and GST |
| Category: | GST |
| Querist: | Manali |
| Answered by: | Advocate C.B.Thakar |
| Tags: | GST, legal heir, Sucession of business |
| Date: | March 2, 2023 |
Assessee was carrying business’s of readymade garments as proprietor for many years. On 27th March 2022, assessee expired. As on the date of his death and as on 31.03.2022, there was closing stock of goods of Worth Rs. 700000 and unutilised input credit available of Rs. 58000/- .
He was survived by his widow and minor child one Son and one daughter. As per the advice of tax consultant, wife has obtained the fresh registration under GST and continued the business. GST number of old proprietor is still not cancelled and no sale of cl stock is made.
Issues:
1. How closing stock of Goods of proprietary concern of late husband can be transfer to proprietary concern of widow , who has continued the said business by obtaining fresh registration under GST.
2. Whether there is any GST liability for transfer of closing stock. Entire stock is out of purchases effected from GST registered suppliers .
3. . How unutised GST input credit of late husband proprietary can be used in the hands of new proprietary concern of widow
4. Any penalty under GST Act in this situation.
It is required to be cancelled from date of death of the proprietor i.e.27.3.2022.
Issues:
1. How closing stock of Goods of proprietary concern of late husband can be transfer to proprietary concern of widow , who has continued the said business by obtaining fresh registration under GST.
Reply: On death of proprietor, wife becomes owner of stock as legal heir. She can bring in the said stock in her new business as introduction of stock through capital account.
2. Whether there is any GST liability for transfer of closing stock. Entire stock is out of purchases effected from GST registered suppliers.
Reply: No liability will arise if transferred through capital account.
3. How unutilized GST input credit of late husband proprietary can be used in the hands of new proprietary concern of widow.
Reply: The above ITC will not be eligible to wife’s business and it will lapse. It is also possible that the ITC is taken on stock of 7 lakhs is more than 58000. In such case, the excess is also required to be paid. (section 29(5)).
4. Any penalty under GST Act in this situation.
Reply: Normally, no penalty will be attracted on above facts. After cancellation of RC of the dead proprietor, final return (GSTR 10) should be filed within 90 days, otherwise late fees for the same may arise.